Quadrant Magnetics says charges should be dropped after confidential information exposed
Attorneys for a Louisville magnetics company and three executives facing federal charges that include sending confidential U.S. military data to China want key portions of the indictment dismissed, arguing prosecutors recently included the classified information in public and unredacted court filings.
In a motion filed on March 11 in U.S. District Court, attorneys for Quadrant claim an expert report filed earlier this month by prosecutors contained "technical data (that) serves as the foundation for the government's 6-year investigation and 9-count Second Superseding Indictment."
The indictment alleges the business violated the International Traffic in Arms Regulations, which are the standards controlling the import and export of defense and military products.
The prosecution built its case around the notion the information is confidential, and its release constitutes a national security risk, the motion argues, but since it was included in a public report without redactions, it should be immediately removed from the U.S. Munitions List — and charges related to their confidentiality should be dropped due to "the government's careless handling of this information."
Quadrant and the U.S. Department of Justice declined to comment on the motion, while attorneys for individual defendants did not respond to a request for comment.
The evidence at the center of Quadrant's motion is a spreadsheet included in an expert testimony that contained composition and characteristics of several rare-earth magnets produced by the company. That information was left unredacted in a court filing by prosecutors submitted on March 4.
Quadrant filed a motion to dismiss a week later, with defense attorneys for Quadrant and the three charged executives — president Phil Pascoe, accounting manager Monica Pascoe and Scott Tubbs, vice president of sales and marketing — arguing prosecutors had "intentionally released to the public technical data" in a filing available on PACER, the federal court's online case-management system.
In its motion, the defense team argued releasing that information publicly calls into question whether that information should have been considered confidential in the first place — and either way, the government has now made those details available to the public.
"By including such technical data in a public filing on PACER, the government has disclosed the very information that it claims is subject to ITAR protection on pain of criminal penalty," the filing said. "This motion addresses the consequences of the government’s public disclosure of the same technical data it is prosecuting Defendants for allegedly disclosing."
On March 8, four days after the information was included in the filing, prosecutors filed to seal that report "in an abundance of caution." That motion was granted, and its access is now restricted, though the document remained open and unredacted over the weekend and into the following week.
The company and three individual defendants were initially charged in November 2022 after an indictment alleged they had repackaged rare-earth magnets (which are stronger than ordinary magnets and use rare metals such as neodymium) smelted in China to appear they'd been smelted in the U.S., a violation of U.S. Department of Defense regulations.
The defendants are accused of shipping those magnets to two American companies that used them in parts supplied for F-16 and F-18 fighter jets used by the U.S. military.
From November: Quadrant Magnetics: Where things stand in case alleging company sent military data to China
The defendants are also accused of exporting about 70 drawings that contained classified technical data to a Chinese company between 2012-18, relating to “submersible vessels and related articles,” along with "fire control, laser, imaging, and guidance equipment."
Quadrant, Tubbs and Phil Pascoe were charged at that time with conspiracy and wire fraud, as well as exporting technical data without a license and smuggling goods from the U.S., while Monica Tubbs was charged with conspiracy and wire fraud.
The case had been scheduled to go to trial in early April. However, defense attorneys filed a motion last week asking to push back that date, in light of the new motion to dismiss and to allow lawyers to continue to review evidence.
U.S. District Court Judge David A. Hale ruled in their favor Friday and postponed the trial's start, citing the most compelling reason as "the recently filed motion to dismiss that raises complex and substantive issues."
A new date has not yet been determined.
Reach Lucas Aulbach at laulbach@courier-journal.com.
This article originally appeared on Louisville Courier Journal: Quadrant Magnetics lawyers say prosecutors released confidential data
